NEW YORK, NY -- (Marketwire) -- 08/26/08 -- API Nanotronics Corp. (OTCBB: APIO) ("API") (the "Company"), a leading supplier of electronic components, nano-optics and nanotechnology research and development to the defense and communications sectors, today announced operating results for the three-month and twelve-month periods ended May 31, 2008.

Financial Highlights for Fiscal 2008

-- Record revenue of $31 million, compared to $20.5 million in 2007, anincrease of over 50%. Revenue in 2008 included a full-year contributionfrom the National Hybrid Group, acquired by API on January 24, 2007;

-- GAAP Net loss for the year was $6.6 million or $0.02 per share,compared with a net loss of $1.0 million or $0.00 per share in the previousyear. The loss includes non-cash charges related to a provision forinventory, stock-based compensation and depreciation totaling $4.9 million.Excluding these non-cash charges and nanotechnology R&D expenses of $3.5million, non-GAAP net income was $1.8 million versus $1.8 million in theprevious year;

-- The Company ended the year with a strong balance sheet with cash andmarketable securities totaling more than $3.1 million, a current ratio over3.73, and no long term debt; and

-- Backlog remains robust at over $16 million.

Financial Highlights for the Fourth Quarter 2008

-- Revenue for the fourth quarter of fiscal 2008 was a record $8.8million, a 13% increase over the $7.9 million recorded in the same periodof fiscal 2007;

-- GAAP net loss of $3.6 million or $0.01 per share, compared to a lossof $0.2 million or $0.00 per share for the same period of fiscal 2007. Theloss includes non-cash charges related to a provision for inventory, stock-based compensation and depreciation totaling $3.5 million. Excluding thesenon-cash charges and nanotechnology R&D expenses of $1.1 million, non-GAAPnet income increased to $1.0 million versus $.6 million in the previousyear's quarter.

Reconciliations of non-GAAP measures to GAAP net cash used by operations, gross margins, and net profit (loss) are included at the end of this release.

Operational Highlights

-- In April 2008, API Nanotronics named Stephen B. Pudles as ChiefExecutive Officer. Mr. Pudles brings extensive industry experience inoperations, product development and sales to API. He succeeds PhilipDeZwirek, who remains Chairman of the Board;

-- In February 2008, in partnership with Israel's Sital Technologies,National Hybrid introduced its new Aries line of 1553 communicationproducts which are pick-and-place compatible with competitors' devices,demonstrating API's design and engineering capabilities and expanding itstarget markets;

-- In November 2007, API Nanotronics delivered its first nanotechnologyorder of its proprietary Subwave(TM) IR Cut Filters to a leading digitalimaging component supplier helping enable digital cinematography;

-- In October 2007, through its NanoOpto subsidiary, API Nanotronicsintroduced its first nanotechnology product, a proprietary line of UVpolarizers;

-- In August 2007, API Nanotronics commenced operations at its newlyacquired nanotechnology facility; and

-- In July 2007, the Company acquired the assets of NanoOpto Corp. Thisacquisition provided API with state-of-the-art intellectual property andfacilities and positioned it as a top tier nanotechnology research andmanufacturing partner to government and industry. The Company currentlyoperates the largest Atomic Layer Deposition (ALD) facility in NorthAmerica.

Profitability Initiative

-- In order to enhance efficiencies, the Company recently commenced theconsolidation of certain operations, including the winding down andrelocation of several locations. Management expects to conclude theconsolidation process by the end of the current fiscal year at which timethe Company will operate in three primary manufacturing facilities, downfrom eight. This consolidation of operations is expected to result inreduced overhead expenses and greater overall efficiencies andprofitability.

Stephen B. Pudles, Chief Executive Officer of API Nanotronics Corp., said, "My mandate at API has been to help the Company capitalize on its unique position and opportunities. In the short time I have been here, we have made significant efforts to improve profitability while investing in the Company's future. While there is still much to do, I am pleased with the results thus far and look forward to the coming year."

About API Nanotronics Corp. (OTCBB: APIO)

API Nanotronics Corp., through its wholly owned subsidiaries API Electronics Inc., National Hybrid Inc., Filtran Group, TM Systems, Keytronics and API Nanofabrication Corporation, is engaged in the manufacture of electronic components and systems for the defense and communications industries. API is also developing a leadership position in the R&D and manufacture of nanotechnology and MEMS products. With a growing list of blue chip customers, including Honeywell/Allied Signal, General Dynamics, Lockheed Martin, and numerous other top technology-based firms around the world, API regularly ships products to clients in more than 34 countries. API owns state-of-the-art manufacturing and technology centers in New York, New Jersey and Ontario, Canada and has manufacturing capabilities in China and a distribution center in Britain. API Nanotronics trades on the OTC Bulletin Board under the symbol APIO. For further information, please visit the company website at www.apinanotronics.com

In this press release, API has provided a non-GAAP financial measure for (i) net cash provided by operations to reflect its financial results without inventory reserves, depreciation, and stock-based compensation expense, (ii) gross margins to reflect its financial results without inventory reserve, and (iii), net profit (loss) to reflect its financial results without stock-based compensation expense. Management believes the non-GAAP presentations make it easier for investors to compare current and historical period operating results. These are not recognized measures under US GAAP, do not have a standardized meaning, and are unlikely to be comparable to similar measures used by other companies. Accordingly, investors are cautioned that these non-GAAP measures should not be construed as an alternative to net earnings or loss determined in accordance with GAAP as an indicator of the financial performance of the Company or as a measure of the Company's liquidity and cash flows.

The following table reconciles annual GAAP net income Year Year
(loss) to non-GAAP net income (loss). ended ended
(In millions) May 31 May 31
2008 2007

Except for statements of historical fact, the information presented herein constitutes forward-looking statements. All forward-looking statements are subject to certain risks, uncertainties and assumptions which may cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. These risks and uncertainties, which are more fully described in the Company's Annual and Quarterly Reports filed with the Securities and Exchange Commission, include but are not limited to, general economic and business conditions, the ability to acquire and develop specific projects, the ability to fund operations and changes in consumer and business consumption habits, our ability to expand our operations in both new and existing markets, our ability to integrate and consolidate our operations, our ability to expand our operations in both new and existing markets and the effect of growth on our infrastructure and the effect of competition in the electronic components, nano-optics and nanotechnology industries. Should one or more of these risks or uncertainties materialize, or should the assumptions prove incorrect, actual results may vary in material aspects from those currently anticipated. All information in this release is as of August 25, 2008. We undertake no duty to update any forward-looking statement to conform the statement to actual results or changes in the Company's expectations.